For the second consecutive day, the rupee has witnessed a huge decline against the dollar in the currency market. According to data, the rupee has weakened by more than 50 paise against the dollar in these two days. The special thing is that hopes for peace talks between America and Iran have increased. On the other hand, crude oil prices have declined. Despite all this, the fall of the rupee is showing no signs of stopping. As a result, it has reached close to the level of 93.50 against the dollar. Importantly, some steps were taken recently to strengthen the rupee; Nevertheless, even after these steps the currency did not get any support. Let us take a closer look at the current data emerging about the rupee.
Rupee fell for the second consecutive day
On Tuesday, the rupee fell 32 paise to close at 93.48 (provisional) against the US dollar. The reasons for this decline were the strengthening of the American currency, fluctuations in crude oil prices and uncertainties regarding the progress of peace talks in West Asia. Forex analysts said that despite the rise in domestic stock markets, the local currency found no support. This situation was also influenced to some extent by the recent decision of the Reserve Bank, in which it had relaxed the restrictions on speculation in non-deliverable forward (NDF) markets.
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The rupee opened at 93.25 in the Interbank Foreign Exchange market. It slipped to a low of 93.63 during the day’s trading; However, at the end of the session it closed at 93.48 (provisional) against the US dollar, showing a fall of 32 paise. On Monday, the rupee had closed at 93.16 against the US dollar, registering a decline of 25 paise. This means that overall, the rupee has weakened by 57 paise against the dollar during this period. The currency had gained 47 paise in the last two sessions.
Recent decisions of RBI
On Monday, the Reserve Bank partially withdrew the guidelines issued on April 1, which were aimed at curbing excessive speculation in the rupee. The banking regulator had set a $100 million (USD) limit on ‘net open positions’ in the non-deliverable forward market and directed banks to comply with it by April 10. Under the revised instructions, authorized dealers—or banks—can now once again offer non-deliverable derivative contracts denominated in the Indian Rupee (INR) to users resident in India or to non-residents. However, they must comply with certain restrictions regarding ‘related-party transactions’. Additionally, the $100 million limit imposed on ‘net open positions’ will remain in force.
Will the rupee cross 94?
Mirae Asset Sharekhan’s Research Analyst Anuj Choudhary said that the rupee declined due to uncertainty over US-Iran talks and rise in crude oil prices. The strengthening of the dollar also put pressure on the rupee. However, a rally in global markets helped prevent the rupee from falling further, at least to some extent. Chaudhary said traders can take cues from the retail sales and ADP employment change data to be released by the US. USD-INR spot price is expected to trade within the range of ₹93.30 to ₹93.90.
**Strengthening dollar index**
Meanwhile, the dollar index—which measures the US dollar’s strength against a basket of six major currencies—rose 0.19 percent to 98.09. Brent crude, the global benchmark for oil, was trading at $94.81 per barrel in the futures market, down 0.70 per cent. Analysts attributed the volatility in crude oil prices to persistent concerns over potential disruptions to oil supplies through the Strait of Hormuz. Additionally, the cease-fire agreement between the US and Iran is set to expire on Wednesday.
**Stock market boom**
In the latest developments, Iran’s chief negotiator on Tuesday said Tehran will not negotiate under pressure and threats, while US President Donald Trump indicated he is in no rush to end the conflict with Iran. In the domestic equity markets, the 30-share Sensex closed 753.03 points or 0.96 per cent higher at 79,273.33, while the Nifty rose 211.75 points or 0.87 per cent to 24,576.60. According to exchange data, foreign institutional investors (FIIs) sold shares worth about ₹1,059.93 crore on Monday.